Norway - Leadership

As Bondevik came to office in 1997, his party, opposed to abortion,
sought to promote Christian values in both schools and society at large.
His coalition was considered to be moderate on economic matters and
conservative on social issues. He pledged to use more of the
country's surplus oil revenues to raise the levels of grants to
families and the elderly. He called for a rise in the minimum pension
and increased spending on foreign aid and development. Norway has
established a Petroleum Fund that is currently worth
US
$60 billion, but Bondevik and his coalition knew that it could not
deplete this fund to increase welfare spending.

Upon coming to power for the second time in 2001, Bondevik promised to
cut taxes, raise spending for foreign aid, and to further the
privatization of state-owned companies that began under
Stoltenberg's leadership— especially the state-owned
communication company, Telenor, and the state-owned oil group and
Norway's largest company, Statoil. Bondevik, however, has taken a
nationalistic position in the banking sector by trying to keep the
country's financial institutions Norwegian.

Although the international economic downturn has had an effect on
Norway's economy, it remains strong as long as the price of oil
is high. Since taking office in October 2001, Bondevik has focused on
fighting poverty at home, on creating better schools and healthcare, and
making a stronger environmental policy. Many of these promises had to be
watered down, however. The coalition faced hard choices during the
negotiations on the 2003 budget and increased spending on healthcare,
child care, and foreign aid, but could not cut income taxes without
creating large budget deficits. The government confronted an even
tougher situation when it evaluated the 2004 budget the following year.
Finance Minister Per-Kristian Foss has tried to include further tax cuts
in the 2004 budget cuts while Prime Minister Bondevik promised more
local government funding. Economic uncertainty, however, makes it
unlikely that the coalition can both increase spending and offer tax
cuts. Since the government does not enjoy a parliamentary majority it
will have to make concessions to either the right, or less likely, the
left, in order to pass the budget. The Labor Party suggested that
Bondevik invite them into government but Bondevik has dismissed that
possibility, at least for the time being.

As a consequence, one of the challenges of Bondevik's leadership
continues to be his relationship to the populist Progress Party leader,
Carl I. Hagen. Hagen is sometimes compared to Jean-Marie Le Pen,
France's leading right-wing anti-immigrant politician, although
Hagen is not as extreme. His party has come to be seen as the silent
partner in Bondevik's government, since both parties share the
priority of cutting taxes and injecting more of the country's oil
wealth into the ailing health service. Tax cuts have been difficult to
institute, however, and Hagen has asked the government to use the
Petroleum Fund (containing around
US
$90 billion) to reduce taxes. The government is unwilling to dip into
the Fund except to cover a budget deficit of
US
$1.3 billion. In March 2003, 100,000 Norwegians were unemployed leading
many senior politicians to question the direction taken by
Bondevik's cabinet.

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